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Paying for family vacations with NIH funds triggers FCA lawsuit and settlement

Northwestern University will pay $2.93 million to settle a federal False Claims Act (FCA) lawsuit brought by a former employee who alleged Northwestern allowed a researcher to submit false claims under certain cancer research grants funded by the National Institutes of Health (NIH). The whistleblower and former purchasing coordinator at Northwestern's Feinberg School of Medicine, who will receive $498,100 of the settlement proceeds, alleged that between 2003 and 2010, the principal investigator on certain federally funded grants submitted fraudulent claims for reimbursement for family trips, meals and hotels for himself and friends and "consulting fees" for unqualified friends and family members. The University also is alleged to have improperly subcontracted, at the principal investigator's request, with various universities for services that were paid for by the NIH grants.

The whistleblower's allegations, including Northwestern's "failure to implement and oversee a proper financial management system," were investigated by the NIH, Federal Bureau of Investigation, U.S. Department of Health and Human Services Office of Inspector General and the U.S. Attorney's Office. The press release by the U.S. Attorney for the Northern District of Illinois cited the "willingness of insiders to report fraud" and the credence given to fraud "allegations from insiders who are often in the best position to detect wrongdoing long before it would otherwise come to the attention of law enforcement." Indeed, the DOJ previously reported a record 647 whistleblower suits filed last fiscal year.

Enforcement in all areas of healthcare continues to grow, highlighting the importance of compliance activities and corrective actions.